Citrix 2006 Annual Report Download - page 92

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Total stock-based compensation and related deferred
tax asset recognized in the Company’s consolidated
statement of income in 2006 is $61.6 million and
$9.6 million, respectively. The detail of the total stock-
based compensation recognized by income statement
classification is as follows (in thousands):
Income฀Statement฀Classifications 2006
Cost of services revenues $ 2,100
Research and development 18,209
Sales, marketing and support 24,095
General and administrative 17,192
Total $ 61,596
In connection with the adoption of SFAS No. 123R, the
Company estimated the fair value of each stock option on
the date of grant using the Black-Scholes option-pricing
model, applying the following assumptions and amortizing
that value to expense over the option’s vesting period using
the ratable approach:
Stock Options granted
during 2006
Expected volatility factor 0.30-0.37
Approximate risk free interest rate 4.5%-4.9%
Expected term (in years) 3.00-3.34
Expected dividend yield 0%
For purposes of determining the expected volatility factor,
the Company considered implied volatility in two-year
market-traded options of the Company’s common stock
based on third party volatility quotes in accordance with
the provisions of Staff Accounting Bulletin (“SAB”) No. 107.
The Company’s decision to use implied volatility was
based upon the availability of actively traded options on
the Company’s common stock and its assessment that
implied volatility is more representative of future stock price
trends than historical volatility. The approximate risk free
interest rate was based on the implied yield available on
U.S. Treasury zero-coupon issues with remaining terms
equivalent to the Company’s expected term on its options.
The expected term of the Company’s stock options was
based on the historical employee exercise patterns. The
Company also analyzed its historical pattern of option
exercises based on certain demographic characteristics
and determined that there were no meaningful differences
in option exercise activity based on the demographic
characteristics. The Company does not intend to pay
dividends on its common stock in the foreseeable future.
Accordingly, the Company used a dividend yield of zero in
its option pricing model. The weighted average fair value of
stock options granted during 2006 was $10.90.
Stock Options
As part of the Company’s 2006 Acquisitions, it assumed
186,642 options to purchase shares of its common stock,
of which options to purchase 120,940 shares of common
stock have a five year life and vest over three years at a
rate of 33.3% of the shares underlying the option one
year from date of grant and at a rate of 2.78% monthly
thereafter. The remaining options assumed in the 2006
Acquisitions vest based on service at varying rates through
April of 2007. All other options granted during the year were
granted pursuant to the Company’s 2005 Plan. Options
granted pursuant to the 2005 Plan typically have a five
year life and vest over three years at a rate of 33.3% of the
shares underlying the option one year from date of grant
and at a rate of 2.78% monthly thereafter. A summary
of the status and activity of the Company’s fixed option
awards is as follows:
Options
Number of
Options
Weighted-
Average
Exercise
Price
Weighted-
Average
Remaining
Contractual
Life
Aggregate
Intrinsic Value
(in thousands)
Outstanding at December 31, 2005 34,305,837 $ 25.86 4.79
Granted 5,162,497 33.95
Exercised (11,173,912) 19.85
Forfeited or expired (1,416,032) 33.03
Outstanding at December 31, 2006 26,878,390 29.55 3.74 $ 124,686
Vested or expected to vest at December 31, 2006 24,801,668 29.46 3.70 $ 120,301
Exercisable at December 31, 2006 18,502,912 30.00 3.54 $ 98,798